Kevin Rudd and Barry O'Farrell in war of words over proposed Navy relocation

Kevin Rudd has called the New South Wales Premier "grumpy" in a war of words triggered by the Prime Minister's plan to downgrade Sydney's Garden Island naval base.

Mr Rudd's main campaign announcement yesterday was an intention to shift the Navy's headquarters from Sydney to Queensland - specifically Brisbane, Cairns and Townsville - so that naval assets would be closer to regional hotspots.

"Relocating some or all of the Fleet Base East to Brisbane, Cairns, Townsville and Perth could take advantage of Brisbane's location as a transit point to operational areas for submarines and amphibious ships, and to amphibious mounting bases in Townsville and Darwin," he told the Lowy Institute in a key address.

"Our national security challenges in the future lie to our north-east, to our north and to our north-west."

NSW Premier Barry O'Farrell used a chance encounter with Mr Rudd, at a harbour-front location with a view of the island, to complain about not being consulted.

"Good morning, Kevin. A phone call would have been helpful," Mr O'Farrell said as they passed on the boardwalk.

"I'm happy to share, your predecessor could share, you should learn to share."

Mr Rudd responded by saying: "You've said you want more cruise ships."

The Premier then held his own media conference to accuse the Prime Minister of playing politics with defence.

"We stand to lose 4,000 direct jobs, all because we have a federal political leader so spooked by the polls he will do anything, even use defence infrastructure, as a tactic to try and win votes north of the NSW border," Mr O'Farrell said.

"What I know is that you don't play politics with this sort of defence infrastructure."

Rudd says NSW Premier being 'grumpy'

Mr Rudd flew to Brisbane to inspect the port there this afternoon and said "the truth of it" is that more jobs will be created in the southern state by continuing defence industries on the island and building up support for cruise ships there.

He accused Mr O'Farrell of being "grumpy".

"Before huffing and puffing and storming down the boardwalk this morning, he should spend a little bit more time in his office and out in the suburbs of western Sydney perhaps starting real construction work on just one major transport infrastructure project for the good people of Western Sydney," he said.